The Smart Grid’s Problem May Be Storage’s Opportunity

I recently attended a conference on smart grid technology in Chicago. Following the conference, I had lunch with another attendee and asked him what he thought about the conference. My lunch guest, who is a wise fellow and has worked for many years in the cleantech and sustainability fields, just rolled his eyes. The conference was fine, he said. But the problem with the conference is that we just spent two days talking about how we make what is in effect a problem for utilities into a problem for consumers. That project he felt might be of interest to utilities and smart grid advocates, but has little hope for success in the real world.

My lunch guest summarized in a few short words the principal challenge of the smart grid, as most utilities are thinking about it today. Our national grid infrastructure is largely antiquated and, as electricity use grows over coming decades, utilities face what is in effect a political problem: Billions of dollars of unpopular new infrastructure spending is needed in order to upgrade the grid. Those expenditures can, however, at least in theory be reduced if electricity consumers can be persuaded or compelled to use electricity differently. Much of smart grid technology, which is referred to as demand response, is about trying to make that happen.

Properly understood, demand response is not really about saving costs, but about moving costs from one party onto another. Compelling a consumer to charge a vehicle or wash clothes at night, rather than at 6:00 p.m. in the evening, means that a utility will have to spend less money to accommodate peak load. But compelling a consumer to act differently is a cost to that consumer. Technology might be able to take some bite out of that cost by eliminating uses of electricity that consumers may agree are unnecessary. Installing a motion sensor on a light switch is a good example. But the question of who has to buy the motion sensor remains.

Utilities and smart grid advocates are not likely to give up on demand response initiatives anytime soon. But, as my lunch guest surmised, they face an uphill battle.

Energy storage advocates have a different story to tell and by many measures a more compelling one. With energy storage, a utility or electricity service provider manages the challenge (and, yes, the cost) of drawing electricity from the grid in the most efficient way possible. The electricity is then stored locally, by means of a distributed energy storage system, which the consumer draws from when and as the consumer wants. Peak electricity usage on the grid is reduced and greater energy efficiency is achieved through the utility’s management of the storage resource without involving the consumer.

This is a good news story for consumers and one which energy storage advocates must be more proactive in telling. Consumer upset about smart meters and concerns about privacy are a virtual invitation to set out a different vision of the smart grid of the future: a smart grid that truly values consumer choice and that leaves power management to the experts—the utilities—rather than imposes it on retail consumers. The smart grid’s problem should be storage’s opportunity.